Financial experts in Insurance Commissioner Deborah Senn's office took control of KPS on Tuesday, starting a review of company financial data that could take weeks or months to finish.

The move came after a Thurston County Superior Court judge approved an order Monday that allows Senn and her staff to take control of the nonprofit company. The legal term for the action is receivership.

KPS Health Plans is the area's largest health insurer, with 80,000 subscribers in Kitsap, Mason, Jefferson, Clallam and Thurston counties.

The company suffered $15 million in financial losses in the past three years. Most of it was lost on underwriting medical claims, especially on insurance plans purchased by the state.

This year, KPS's reserves fell below the $3 million minimum set by state law for health insurers; that's what prompted the insurance commissioner's office to ask for a court order to take over KPS.

Harkins said placing a company's officers on leave is standard practice in a receivership situation.

"The interest in having the officers go is to safeguard their books and records" from possible changes, he said.

The rest of the KPS staff was briefed on the takeover Tuesday. They were told that they'll continue with their current jobs and that daily operations should continue.

KPS customers shouldn't expect any change in their coverage at this time.

"The intention is that administrative functions should continue," Harkins said. "The point of contact is still KPS. Customer service folks should still be at work. All of that is contingent on the real financial picture of the company, which is an unanswered question at this point."

David Gitch, president of Harrison Hospital, said he sent a letter to Senn on Monday morning requesting a delay of the receivership order.

Gitch said he wanted the insurance commissioner to consider KPS's restructuring plan, which called for shedding three state purchase programs and raising at least $2.6 million through member physicians.

The letter said his counterparts at Jefferson General Hospital and Mason General Hospital shared his interest in giving KPS officials more time to prove that their plan could work.

"We felt that in moving ahead with receivership, it placed an additional kind of bleak outlook on things," Gitch said. The hospital president said he now hopes the insurance commissioner works to make KPS a viable company again.

But it's unknown what a rebuilt KPS may look like.

Harkins said he can't speculate on what will happen to KPS, but said it's typical to sell a company once it's been stabilized. Liquidation of company assets is also possible, but as a last resort.

"It's possible that KPS could run in the future as KPS," he said. "Another insurer could operate KPS as a subsidiary, or KPS could be assumed into a larger entity. Those are the likely scenarios, but we're not sure what's ahead."

Dr. Mark Adams, president of KPS's board of directors, said he's concerned that time is wasting to save the company.

Adams said the insurance commissioner's staff isn't working with KPSdirectors, and that worries him.

"I don't know how they're going to save the company when they don't know how to run an insurance company," he said.

"If there really is an intent to save the company, it will have to be done immediately. The more time that goes by, the more people will switch to other plans. That includes the physician members, too, if they don't see something is happening quickly."

Questions?

KPS subscribers concerned about their coverage or who have questions about the company's financial condition may call Insurance Commissioner Deborah Senn's toll-free Consumer Hot Line at (800) 562-6900.

Reach reporter Elena Castaneda at (360) 792-9210 or at ecastaneda@thesunlink.com.

More Reading...

* A plan for rehabilitating the firm may be presented to a Superior Court judge within three weeks. A preliminary audit of KPS Health Plans shows the health insurer's financial status is worse than the state Office of the Insurance Commissioner believed when the ... [Read More...]

* The Insurance Commissioner's office says it will make an announcement by Friday. Subscribers to KPS Health Plans may know more about the company's fate by the end of this week. An official in the state Office of the Insurance Commissioner said Monday that ... [Read More...]

* A state-run financial review team will start its management of KPS today. A Thurston County judge signed an order Monday giving state Insurance Commissioner Deborah Senn control of KPS Health Plans. Members of Senn's financial review team will start their takeover of the ... [Read More...]

* The strategy to save KPS depends on physician investments and selling the insurer's building to thecity of Bremerton. A community group dedicated to resurrecting KPS Health Plans has unveiled a strategy to save the company. The proposal to revive KPS came out of ... [Read More...]

* The four officers have been on administrative leave for most of this month. The four top executives at financially troubled KPS Health Plans lost their jobs Friday. KPS President Robert Schneidler, Chief Operating Officer Jayne Wallace, Chief Finance Officer Jim Page and General ... [Read More...]